Trailing Stop Limit Orders

Hero

What is a Trailing Stop Limit Order?

A Trailing Stop Limit Order is a modification of a typical Stop Loss Limit Order that will trigger at a defined percentage or absolute amount away from the asset's current reference price (Index, Last, or Mark).

In a Trailing Stop Limit Order, a Limit Order will be placed when the price has reverted from the most favorable peak price by the specified offset amount.

To use this order type, three parameters must be met:

  • •

    Trailing offset: This is the offset from the reference price (Index, Last, or Mark*) at which a market order will be placed. This can be entered as either a set percentage or a nominal quote currency offset (e.g. USD).

  • •

    Limit offset: This is the offset from the trailing price at which a Limit Order will be placed. Limit offset can be negative or positive, this can be entered as either a set percentage or a nominal quote currency offset (e.g. USD).

  • •

    Order Quantity: This is the total quantity of your order, it defines the amount you are trying to buy or sell.

Trailing Stop Orders are available as primary or conditional close orders via the Kraken Pro Order Form widget.

To close a long position, you must place a Trailing Stop Limit Sell Order below the current market price. Let's say the current price of BTC is $20,000 and you are long 1 BTC. You use a Trailing Stop Limit Sell Order for protection from price declines and to profit from price rises.

You submit a Trailing Stop Limit Sell Order with a % Trailing offset of 5% and a limit offset of 0% for a quantity of 1 BTC:

If the price increases after order entry at $20,000 to a high of $22,000, and then declines by 5% or $1,100, the Trailing Stop Limit Order will trigger at a price of $20,900 and submit a Limit Sell Order at $20,900 for 1 BTC to exit the position.

You submit a Trailing Stop Limit Sell Order with a USD trailing offset of $1000 and limit offset of -10 USD for a quantity of 1 BTC:

If price does not increase after order entry at $20,000, and declines by $1,000, the Trailing Stop Limit Order will trigger at a price of $19,000 and submit a Limit Sell Order at $18,990 for 1 BTC to exit the position.

With an order entry at $20,000, if price increases to a high of $22,000, and then declines by $1,000, the Trailing Stop Limit Order will trigger at a price of $21,000. Submitting a Limit Order at 20,990 for 1 BTC to exit the position.

To close a short position, you will place a Trailing Stop Limit Buy Order above the current market price. Let's say the current price is $20,000 and you are short 1 BTC. You use a Trailing Stop Limit Buy Order for protection from price increases and to profit from price declines.

You submit a Trailing Stop Limit Buy Order with a % trailing offset of 5% and a limit offset of 0% for a quantity of 1 BTC:

If price declines after order entry at $20,000 to a low of $18,000, and then increases by 5% or $900, the Trailing Stop Limit Order will trigger at a price of $18,900 and submit a Limit Order at $18,900 for 1 BTC to exit the position.

You submit a Trailing Stop Limit Buy Order with a USD trailing offset of $1,000 and a limit offset of 10 USD for a quantity of 1 BTC:If price does not decline after order entry at $20,000, and increases by $1,000, the Trailing Stop Limit Order will trigger at a price of $21,000 and submit a Limit Buy Order at $21,010 for 1 BTC to exit the position.

If the price declines after order entry at $20,000 to a low of $18,000, and then increases by $1,000, the Trailing Stop Limit Order will trigger at a price of $19,000 and submit a Limit Buy order at $19,010 for 1 BTC to exit the position.



What is a Trailing Stop Limit Order?

Brauchst du Hilfe?